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At first glance the property looks to be in a good location: close to transport (tram and trains), parks, restaurants. However that goes for the hundreds of other apartments in that area. I'd be very cautious about buying brand new apartments in Melbourne if I were you. Granted, new properties offer superior depreciation benefits in the first number of years, however in the first place they are likely to be overpriced. For an agent to tell you its 'underpriced' already rings alarm bells to stay away. Why in the world would a developer knowingly sell something for less than its worth? Most of the time, everything sells for exactly what its worth based on current market conditions, or otherwise above what its worth.
$600+K is a heck of a lot of money. I strongly advise you to have a look at the prices of comparable properties in the area that have actually sold in order to gain a better understanding of whether it's worth the price or not. Frankly speaking, if you want to look at brand new stuff, I'd rather be looking at a brand-new townhouse in someplace like the inner-west, or otherwise compromise and buy something that is well located or a recently renovated small 2 bedder in places like Yarraville, Footscray…
Or you could head out East and look at the outer suburbs, picking up a solid 3-4 bedder on a massive block of land with subdivision potential for $500-550K or so and save having to borrow another $140K. I think you really need to ask yourself why you want to buy THIS particular property and why you prefer to buy an apartment over buying something 'landed', like a detached house, terrace, townhouse or villa unit. There's so many things to consider here we could write a book on it.
That is a big price tag. What are the attractive features of the apartment? What's the expected rent? Avoid buying something with a 'rental guarantee'! Beware also a possible glut of apartments coming onto the scene over the next couple of years…your apartment could very well be worth less than $646K at completion.
ummester wrote:fWord wrote:That's right, or perhaps the forum is quiet because the property market is quiet.I agree with you again – wonder of wonders:)
Actually, my answer was a 'duh' statement. Just wanted to see if anybody could pick that up.
grantos_champos wrote:In everyone's experience, how many properties is too many for a PM to properly manage and keep both sides happy? Any numbers someone can throw out there?This is a tricky question as I guess there's no exact number where everything falls apart for a PM. It's like clients in my business asking me how much to feed their dog.
'Sure, for your dog weighing 23.89kg, feed it 56.55g of moist food in the morning, then combine that with 16.49g of dry food in the evening and another 266.01g of moist food. Oh wait, let me work those figures again.'
Anyway, in all seriousness, I once read of a PM having managed over 200 properties in the past. If that was over 200 properties at once then I'll be quite concerned.
lifesjourney wrote:Maybe some of the 400 guests are user's like me – they have a look around and if they feel like responding or have a question then they sign in. ??
That's right, or perhaps the forum is quiet because the property market is quiet.
That's interesting…do you have any information on Melbourne? My brother wants to get into the market. If I had the money and the guts, I'd be looking to Brisbane also, but for now I'd prefer not to go interstate.
Ossi89 wrote:Thanks for the great infomation eveyone. I am very new to all of this so my questions are quite basic.The loan is relatively small as I am buying in a large country town, and my dad has agreed to cover any repayments (if the property is vacant) while I am finishing my last year of university. I currently have a pre-approval so just need to find a property and pass the valuation.
So hypothetically, if I decided to take a risk and not disclose the fact that I am resigning from my job to the bank, how long do I need to wait before the bank can't pull out of the loan. For example, once the property settles I am safe right, regardless of what happens after that?
Cheers.
Well done for starting young. I thought most university kids will be spending their savings on fancy clothes, getting a car loan or buying the next iPhone.
On the topic of LVR, beware that the bank may tolerate a lower LVR on a property in a country town as compared to a property in a large city or larger regional center. This means they may decide to loan you say, 70% of the value of the property instead of 80% which is currently the norm for property in the city (assuming no LMI).
I would suggest reading the bank documentation carefully. It's a guess that after settlement, the cheques have been exchanged and the bank has disbursed the funds to you, and in that instance you should be safe. I'm just considering the risk of you either losing your deposit if the bank does find out before settlement and refuses to finance your deal, or your dad has to come up with a couple of hundred grand cold hard cash to prevent you from losing the deal.
Consider firstly: are you dead set on having to buy a property before your next job? If so, why? Is it worth the risk? They say that good deals pop up all the time. Having a little patience could pay off in the longer run, rather than lying awake at night for days on end prior to settlement.
Definitely in agreement here with what's recommended above: do not buy until you have found another job, preferably one with no probationary period (your boss might waive it if it's obvious you're a capable worker within the first month or so) or a short probationary period. And if at that stage you are really in a hurry to buy, ask your boss kindly for a letter to state that there is no probationary period and that you're employed at a permanent full time basis with a certain salary and work hours, a letter which should be printed on company letterhead and duly signed.
This was how I went about buying just one month after being employed. In my case this was necessary as well because of a combination of factors:
1. The lower salary from the old job wouldn't qualify for a large enough loan
2. Timing: the right property appearing at roughly the 'right' time.In essence, your circumstances are unique and you have preferences of what constitutes the 'ideal' property as well, so you may feel compelled to buy if one hits the market even though your job is no longer secure. But rather than take a risk here which could turn into a painful sting, it'd be wiser to hold off till the job is secure. Furthermore, even if your dad is happy to help with repayments (as mine is if things go REALLY sour), I think family is just a 'back up'. Make sure you can manage on your own in the first place, even if things go pear shaped, otherwise you're definitely overextending. Of course, this is unless your dad is the one who desperately wants you to buy, then that's a different issue altogether.
Good point Scott, although in this instance I am debating that the tenants actually have paid and it was the agent's office at fault for not ensuring the funds were disbursed to my account. Other than the missing rent these two weeks, I've been paid consistently every fortnight. Regardless, this is a grave concern.
As I type this, I'm chasing up two weeks of missing rent. Not long before, I went for a holiday for 2 weeks or so, round about the same time my PM went on leave. Recently I got down to checking my bank statements and found 2 weeks of rent were missing from the statements, corresponding to the period we were both on vacation.
I was under the impression that property investment was supposed to yield passive income. That is, money that comes in without you actually needing to work for it. This missing rent turns that concept on its head. Apparently if either the PM or myself (or both of us) go on vacation, the money doesn't come in! And of course, if I didn't check my bank statements and trusted that everything should be working fine, it would have been a grave error and my loss to bear.
Time and time again I've learnt to chase up and check things over and over. It makes you seem paranoid to do this, but life has taught me this much: don't concern yourself about what things should be like. Accept the things that are and rectify issues accordingly.
Anyway, I've spoken to an ex-PM as well and I'm sure they too have their own challenges. This particular person said that, between landlords that don't want to spend a cent on repairs and tenants that complain about everything, you've got your hands all tied up! That said, some PMs probably have WAY too many properties on their book to successfully manage them to an acceptable standard, hence causing the issues many people raise as above.
Fully committed already, that's why.
Telling you to sell now because prices will be lower next year is like your own property agent using scare tactics to convince you to accept the first [low] offer that comes along. I could just as easily say, why not hang on to the property until conditions improve? Key question to ask yourself is, is it going to hurt more to wait? Do you 'want out' right now?
Easier said than done, but this is key: sell when the news is exceedingly good, and buy when the news is exceedingly bad.
Okay, I'm far from a 'seasoned investor' but the more opinions you get, the better informed you're likely to be. Besides, I'm sitting at home recovering from a bad ferret bite wound on my thumb, so I might as well write. Here's my personal opinion based on two properties.
Property 1 is based in an outer Eastern suburb of Melbourne, purchased in Aug 2009 at the height of the FHB frenzy. This was back in the day when people were willing to pay any price to knock out a competitor just for the sake of getting into the market. The house is a typical suburban late 1970's brick veneer, 3 bedroom/ 1 bathroom/ double carport on 860sqm of land. The median house price in this suburb at that time of purchase was around $385K, for an average of $396,300 by the end of 2009. The house was arguably in the 'premium' part of the suburb and was hence purchased for a little more than the median price.
The median price in the suburb of property 1 was $470K averaged for the year of 2010 and in 2011 has fluctuated between a low of $417K in July to a high of $545K in August 2011. Today there is a house for sale in the near vicinity for 'Above $415K'. This is a brick veneer, 3 bedroom/ 1 bathroom/ single carport on a subdivided block (roughly half the size of land on property 1). It is also newer inside and renovated, compared to the older style of the kitchen and bathroom in property 1.
Comments on property 1: It would be simplistic to say that the price of property 1 has increased simply because the median has done so, although this may indeed be the case. However it is also debatable as to HOW MUCH the value of property 1 has actually changed, since it is not considered a 'median-priced' property in the suburb. A judgement on its price should hence be made on properties in the near vicinity which would mean similar distance to desirable amenities. But a price comparison is not easy to construct. Even if the comparative property currently listed is sold and the sale price is known, it sits on a smaller block of land and is also renovated, unlike property 1. I will leave you to draw your own conclusions here.
Property 2 is based in a coastal regional center approximately 1 hour's drive away from Melbourne. It is serviced by highways and a train line that goes right into Melbourne CBD. Property sales are slim in this part of the regional center. The property is a 3 bedroom/ 2 bathroom/ double carport 1930's art deco weatherboard that was recently renovated and sits on 410sqm of land, approximately 66% the size of land of most neighbouring properties (townhouses excepted, although their land size is also lesser than 400sqm). It was purchased in December 2010 when the market was already considered to be weakening.
At the time of purchase, the median price for this area was $418K. The price paid was again higher than the median price for December 2010, but nowhere near the average median price for the year 2010, which was $723,750. Because there are limited sales in this area, it is difficult to analyse the monthly median price performance for the year of 2011, however it has fluctuated between a low of $365,250 in January to a high of $1,450,500 in March. The most recent median price available was for July at $455K.
Comments on property 2: To draw conclusions on the current price of this property based on median price trends would again be simplistic. Firstly, its land size is smaller than that of a number of other detached houses in its vicinity. Secondly, because this area is bayside, as you get closer to the water's edge and the parks, the houses can become exponentially more expensive, with more value added for bay views. Thirdly, the limited number of recent sales (ie. both coming on to the market and being sold as a result) in the area, making it difficult to compare prices. The price of houses for sale in the vicinity of property 2 currently range from $535K for a renovated 2 bedroom/ 1 bathroom/1 carport weatherboard on about 300sqm of land (or less) to $1,600,000 for a unrenovated 4 bedroom/2 bathroom/ 2 carport on 1250sqm of land with bay views. The 'median price' for the houses currently on sale would sit at around $700K.
In conclusion: it's not always easy to make a judgement on prices for each individual property. But a loss of 'hundreds of thousands' on these property purchases? Hardly, it seems. Perhaps the values have actually increased or remained flat? I'll let you be the judge of that.
It's just funny to see how this thread (and ones like these) seem to gasp from time to time before going under the water again. Keeps the forum interesting.
dellas wrote:im wanting to buy with my gf, she lives out dandenong way and wants to buy a house and land package around lynbrook/lyndhurst area, is this a a good area? i have 120k saved.A friend once recommended that I look in those areas, back when I was looking for a first home. I don't know much about the area, but if you see that there's still heaps of new houses coming up (and space for plenty more), beware of possible over supply in those areas. If there are many similarly new houses in the same area, your capital growth is likely to be constrained for some time.
If you are considering Lynbrook or Lyndhurst, have you considered Dandenong itself? What about Berwick? What about Springvale or Springvale South, both of which have lower vacancy rates than all the suburbs mentioned prior? When you're looking for a property to buy in a particular suburb, look into the vacancy rates of that suburb at SQMResearch. Go for suburbs with low vacancy rates at 2% or below. If there's demand in your area, it will improve the prospects of capital growth.
Do you absolutely need to buy a brand new house (and hence go for house and land packages) or would you be comfortable buying into a structurally sound 1970s brick house that has potential for improvement? It is also difficult to judge your budget simply by the amount you have saved, because we do not know how much debt you'd be comfortable to have and what you can comfortably repay. Have you consulted with a few mortgage brokers to see what their recommendations are?
hbbehrendorff wrote:We currently have a historic low number of people per dwelling in Australia, Remember we don't actually need a 250sqm house for every 0.5 populationThat means as people figure out that housing in a rip off right now, They will move in with other people and supply's will continue to increase
So, a reduced household size continues to contribute to constrained supply in Australia. I can easily count on the fingers of one hand, the number of people I know who still live with parents. The vast majority of the folk I know generally fall into these main groups:
1. People who rent either by themselves or with others, have been happily doing so for some time and not looking to buy, not even in the near future.
2. People who used to rent but have recently bought (or are going to buy) their own home and moved into it. Some of them did so shortly before or after forming a 'household unit', that is, getting married or getting children.
3. Those who currently live in their own home either singly, have a family or live with a long-term partner.And I can't even think of anybody I know who used to rent and has now moved back with their parents. I only know of TWO single people who are currently paying off their own homes and chose to move back with parents for a combination of reasons: to enjoy the comforts that parents can offer, to pay off their home quicker or to reduce their loan to a more manageable amount before they move out. The gist of it is that you generally have plenty of people leaving their parents and settling down elsewhere.
Young people fly the nest and leave their parents for a myriad of reasons. As far as I can see, Western culture differs a lot from that of most Asians. Young Australians are, for whatever reason it may be, seemingly very keen to get away from their 'old folks', whereas in a lot of countries in Asia, living at home for an extended period (and only moving out after marriage) is an accepted norm. My point is that it's going to take a lot for people here to start moving back with their folks, in order to result in the overall increase of household size and increased supply that you believe would eventually exist.
realestateedu wrote:4 me I would always trust a one bedroom unit within 7km than in a mining town … IMHO
A 1-bedroom UNIT, yes. A 1-bedroom APARTMENT, probably not. This is not a comparison with mining town properties because personally, I know nothing about those. However there is a very real threat of oversupply of 1-bedroom apartments in some inner city suburbs.
hbbehrendorff wrote:Can't then things stay as they are ? if you want pet insurance, then you buy it from a private company…
But if you don't want it then that's just your choice to make and therefore you won't receive any benefits of that cover..
Should the government now control house insurance since we had floods and penalize people who don't want to insure there house ?
Key differences between the proposed 'Medicare for Pets' and insurance are primarily in the excess payable and in coverage regardless of pre-existing conditions.
With pet insurance, the most common excess I see is $200. So if for example, a dog repeatedly visits my clinic because of skin and ear problems, spending roughly $120 each visit on the consultation, basic diagnostics such as swabs and skin scrapes, ear medication, antibiotics, anti-inflammatories etc, even an owner who is covered by pet insurance would be out of pocket for the full $120 each time. My clients who have pet insurance frequently cite this as the major drawback of pet insurance. Insurance was of little benefit to them and they ended up paying vet bills, boarding etc at normal rates AND pay the insurance premiums on top of it.
Additionally, consider that a pet can get all the associated benefits of paying the levy, regardless of its age or any pre-existing conditions. Some of my clients ONLY consider insurance once a serious condition is diagnosed and they are worried about the mounting costs. By then it is already too late to get a pet insured because insurance companies will not pay any costs associated with the management of that condition.
hbbehrendorff wrote:Im not having a personal go at you, But you have to realize that anything government gets its hands on, it wrecks, and state wide health care for animals would be no differentMore government and more control just means more administration, less efficiency and more cost to everyone. big government is not the solution to all the problems in our lives and imo this is not progress.
thats just my take.
Haha, believe me, I don't have any more faith in the government than you do. Not here anyway.
Unfortunately as it stands right now, with multiple private companies offering pet insurance, the message ain't getting far enough, especially judging by the number of people who actually ask me if there is 'Medicare for Pets' or if insurance is available. And neither does it ensure that people microchip and register their animals in order to get the benefits that insurance provides. Microchipping and registration imposes responsibility on pet owners, which should be the norm. Pet owners should not be allowed to buy a cat for Christmas and then dump it outside to become a 'stray' after it's urinated once in their house!
One of the issues I've noted in my line of work is people acting as 'surrogates' for dozens of stray cats in the neighbourhood, not actually taking any responsibility for them but then feeding them and allowing them to produce more kittens, which a lot of councils are struggling to keep under control. It results in literally hundreds of kittens coming in to my clinic to be destroyed. Imagine if a desexed animal could be accorded more benefits for the same levy, or otherwise same benefits but a lower levy.
Once I had one client bring in a 'stray' cat that she feeds but does not own. It had a complete fracture of one of its back legs, the leg was flapping in the breeze. The cat wouldn't stand a chance against other stray cats or an oncoming vehicle. I advised her of the means to manage it. Xrays. Surgery. Minimally it should get xrays and a cast. Nope. She didn't want to spend too much money on a cat she actually didn't own. She promptly took it back home and said she'd shove it out to the streets again. If she had the equivalent of 'medicare' for this cat, she'd treat, no probs. After all she was already paying the levy, might as well take advantage of that and get the surgery done.
emptyvessel wrote:BTW – thanks for posting your idea in here fWord.
No probs. Just thought it was getting a little quiet in here with just you posting ideas!
